Half-year Report

RNS Number : 8661K

Eden Research plc

27 September 2016

 

Eden Research plc

 ("Eden" or "the Company")

Half-year Report

Eden Research plc (AIM: EDEN), the AIM listed company that provides breakthrough natural microencapsulation technologies to the global agrochemicals, animal health and consumer products industries, announces its interim results for the six months ended 30 June 2016.

Business highlights

Commercial:

·     First commercial sales of lead agrochemical product, 3AEY, in Kenya, Greece, Spain and Italy

·     Sales development progressing in-line with expectations with market demand being realised by Eden's partners through the botrytis application season (late August and September)

·     Appointment of Strategic Commercial Advisor (plant protection)

·     Appointment of Regulatory Strategy Advisor (plant protection)

Regulatory:

·     EU approval received for Eden's first agrochemical, fungicide product, 3AEY, in Southern Europe in Spain, Italy and Bulgaria

·     Further national-level authorisations expected to follow in France and Portugal in time for 2017 growing season

·     Label extensions in Greece and Spain for new crops and disease targets

·     Label extensions received in Kenya now include authorisation for the treatment of roses

Financial highlights

·   Placing of £2.6m (gross) in March 2016

·   Revenue for the period of £0.11m (H1 2015: £0.16m)

·   Operating Loss for the period was £0.86m (H1 2015: loss of £0.70m), £0.45m excluding the non-cash items, amortisation and share based payments (H1 2015: loss of £0.31m). Administrative expenses of £0.55m (H1 2015: £0.47m)

·   Cash and cash equivalents at 30 June 2016 of £2.01m (at 30 June 2015: £0.1m)

·   Expanding investment in regulatory clearances unlocking commercial potential in new, important territories

·   Cash outflow increase (H1, 2016: £0.60m, H1, 2015: £0.33m) due to rise in creditor payments

Sean Smith, Chief Executive Officer of Eden, said:

"So far this year, we have seen the first significant commercial sales of 3AEY into the agrochemicals market in Kenya, Greece, Italy and Spain. Whilst the botrytis season is not quite over and, as such, we don't have final sales quantities from our commercial partners for this season, Eden and its partners are very pleased with the sales that have been generated so far. Particularly in Italy where our partner, Sipcam Italia SpA, has invested a significant amount of resource into the commercial launch of "3logy", the brand name they have chosen for 3AEY in that region.

"For our nematicide product, negotiations are continuing with a multi-national industry leader, and progress has been made towards a satisfactory conclusion. A final agreement is expected this year covering multiple territories around the world, subject to further negotiations.  A number of evaluation projects for both Eden's technologies and products are on-going and I am pleased with the progress that is generally being made, as well as with regulatory progress where territories such as the USA are now being actively pursued.

"I am also pleased to welcome two new people to the team at Eden. Michel Villeneuve has joined as Senior Strategic Commercial Advisor. Michel has over thirty years' experience in a variety of senior commercial, regulatory and management roles with major multinational companies involved in plant protection. Peter Watson has been appointed as Regulatory Strategy Advisor. Peter has worked for the UK's Chemicals Regulation Directorate and Dow Chemical in a number of senior regulatory roles. Both gentlemen bring tremendous experience, insight and drive to our efforts to accelerate commercialisation of our first products.

"I look forward to providing shareholders with a more comprehensive update on 3AEY sales and other commercial progress in due course."

Enquiries:

Eden Research plc	www.edenresearch.com
Sean Smith, Chief Executive Officer	Tel: [phone]
Alex Abrey, Chief Financial Officer
Shore Capital and Corporate Limited	www.shorecap.com
Stephane Auton/Patrick Castle	Tel: [phone]
Walbrook PR Ltd	Tel: [phone] or [e-mail]
Paul McManus	Mob: [phone]
Lianne Cawthorne	Mob: [phone]

Eden Research plc Consolidated Statement of Comprehensive Income for the six months ended 30 June 2016
		Six months ended 30 June 2016 GBP'000 unaudited		Six months ended 30 June 2015 GBP'000 unaudited		Year ended 31 December 2015   GBP'000 audited
Group Revenue		109		160		883
Cost of sales		(11)		-		(99)
Gross profit		98		160		784
Administrative expenses		(550)		(472)		(1,020)
Amortisation of intangible assets		(337)		(335)		(655)
Share based payments (note 8)		(73)		(52)		(248)
Total other operating expenses		(960)		(859)		(1,923)
Operating loss		(862)		(699)		(1,139)
Finance income/(costs)		2		(20)		(20)
Loss on ordinary activities before taxation		(860)		(719)		(1,159)
Tax on loss on ordinary activities		82		101		101
Loss for the financial period		(778)		(618)		(1,058)
Other Comprehensive Income net of tax		-		-		-
Total Comprehensive Income since last Report		(778)		(618)		(1,058)
Loss per share (pence) - basic and diluted (note 5)		(0.44)		(0.40)		(0.68)

Eden Research plc

Consolidated Statement of Financial Position as at 30 June 2016

	30 June 2016		30 June 2015		31 Dec 2015
	GBP'000		GBP'000		GBP'000
	unaudited		unaudited		audited
ASSETS
NON-CURRENT ASSETS
Intangible assets (note 6)	5,290		5,621		5,543
Investments in associates (note7)	923		-		923
	6,213		5,621		6,466
CURRENT ASSETS
Trade and other receivables	238		48		164
Cash and cash equivalents	2,007		136		148
	2,245		184		312
TOTAL ASSETS	8,458		5,805		6,778
LIABILITIES
CURRENT LIABILITIES
Trade and other payables	598		428		752
TOTAL CURRENT LIABILITIES	598		428		752
TOTAL LIABILITIES	598		428		752
EQUITY
Called up share capital	1,847		1,541		1,588
Share premium account	29,140		26,014		26,861
Merger reserve	10,210		10,210		10,210
Warrant reserve	808		539		735
Retained earnings	(34,145)		(32,927)		(33,367)
TOTAL EQUITY attributable
to owners of the parent	7,860		5,377		6,027
TOTAL EQUITY AND LIABILITIES	8,458		5,805		6,779

Eden Research plc

Statement of Changes in Equity as at 30 June 2016          

	Share capital	Share premium	Merger reserve	Warrant reserve	Retained earnings	Total
	GBP'000	GBP'000	GBP'000	GBP'000	GBP'000	GBP'000
Six months ended 30 June 2016
Balance at 1 January 2016	1,588	26,861	10,210	735	(33,367)	6,027
Loss and total comprehensive income	-	-	-	-	(778)	(778)
Transactions with owners
- Share issue - Options granted	259 -	2,279 -	- -	- 73	- -	2,538 73
- Options exercised/lapsed	-	-	-	-	-	-
Transactions with owners	-	-	-	-	-	-
Balance at 30 June 2016	1,847	29,140	10,210	808	(34,145)	7,860
Six months ended 30 June 2015
Balance at 1 January 2015	1,541	26,014	10,210	524	(32,346)	5,943
Loss and total comprehensive income	-	-	-	-	(618)	(618)
Transactions with owners
- Options granted	-	-	-	52	-	52
- Options exercised/lapsed	-	-	-	(37)	37	-
Transactions with owners	-	-	-	15	(15)	-
Balance at 30 June 2015	1,541	26,014	10,210	539	(32,927)	5,377

 

Eden Research plc

Statement of cash flows for the six months ended 30 June 2016

	Six months		Six months
	ended		ended		Year ended 31
	30 June 2016		30 June 2015		December 2015
	GBP '000		GBP '000		GBP '000
	unaudited		unaudited		audited
Cash flows from operating activities
Cash outflow from operations	(598)		(327)		(186)
Tax credit received	-		101		101
Net finance charges paid	-		(20)		(20)
Net cash used in operating activities	(598)		(246)		(105)
Cash flows from investing activities
Capitalisation of development expenditure	(83)		(33)		(132)
Finance income	2		-		-
Net cash used in investing activities	(81)		(33)		(132)
Cash flows from financing activities
Share issue costs	(131)		-		(30)
Issue of equity shares	2,669		-		-
Net cash from financing activities	2,538		-		(30)
Increase/(decrease) in cash and cash equivalents	1,859		(279)		(267)
Cash and cash equivalents at
beginning of period	148		415		415
Cash and cash equivalents at
end of period	2,007		136		148

Cash and cash equivalents comprise bank account balances.

 

Notes to the Interim Results

1.            The above numbers have not been reviewed by the Company's auditors.

2.            Nature of operations and general information
 

Eden is an early stage revenue company with intellectual property and expertise in encapsulation, terpenes and environmentally friendly technologies to provide naturally occurring solutions to the global agrochemicals industry, the animal health industry, and consumer products. Revenues are earned by the Company through identifying suitable industrial partners and entering into licence or distribution agreements.

The financial information set out in this interim report does not constitute statutory accounts.  The Company's statutory financial statements for the year ended 31 December 2015 are available from the Company's website. The auditor's report on those financial statements was unqualified.

3.            Accounting Policies

Basis of Preparation 

These interim condensed consolidated financial statements are for the six months ended 30 June 2016. They have been prepared following the recognition and measurement principles of IFRS.  They do not include all of the information required for full annual financial statements, and should be read in conjunction with the financial statements of the Company for the year ended 31 December 2015.

These financial statements have been prepared on the going concern basis and under the historical cost convention.

These condensed consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2015.

The accounting policies have been applied consistently for the purposes of preparation of these condensed interim financial statements.

4.            Copies of the interim statement are available from the Company at its registered office, as well as on the Company's website.

5.            Loss per share

	Six months ended 30 June 2016 GBP '000 unaudited		Six months ended 30 June 2015 GBP '000 unaudited		Year ended 31 December 2015 GBP '000 audited
Loss per ordinary share (pence) - basic and diluted	(0.44)		(0.40)		(0.68)

Loss per share has been calculated on the net basis on the loss after tax of £0.78m (30 June 2015: loss £0.62m, 31 December 2015: £1.06m) using the weighted average number of ordinary shares in issue of 178,432,719 (30 June 2015: 154,142,880, 31 December 2015: 155,685,557).

Due to the loss for the period there is no dilution of the loss per share arising from options in existence.

6.            Intangible assets

	Intellectual property	Licences and trademarks	Development Costs	Total
	£	£	£	£
COST
At 1 January 2015	8,592	447	2,980	12,019
Additions	-	-	32	32
At 30 June 2015	8,592	447	3,012	12,051
Additions	65	-	177	242
At 31 December 2015	8,657	447	3,189	12,293
Additions	-	-	83	83
At 30 June 2016	8,657	447	3,272	12,376
AMORTISATION
At 1 January 2015	4,692	353	1,050	6,095
Charge for the period	220	18	97	335
At 30 June 2015	4,912	371	1,147	6,430
Charge for the period	220	(3)	103	321
At 31 December 2015	5,132	369	1,250	6,750
Charge for the period	219	9	108	336
At 30 June 2016	5,351	377	1,358	7,086
CARRYING AMOUNT
At 30 June 2016	3,306	70	1,914	5,290
At 31 December 2015	3,525	79	1,939	5,543
At 30 June 2015	3,680	76	1,865	5,621

7.            Investments in associates

Details of the Company's associates are as follows:

Name	Principal activity	Country of incorporation	Proportion of ownership interest and voting power held
			%
TerpeneTech Limited	Development and sale of biocide products	England and Wales	29.9

The investment in associates is stated at cost.
 

8.            Share based payments

Share Options

              Eden Research plc operates an unapproved option scheme for executive directors, senior management and certain employees.

			Six months ended 30 June 2016				Six months ended 30 June 2015
			Weighted				Weighted
			average				average
			exercise				exercise
			price (pence)		Number		price (pence)		Number
Outstanding at the beginning
of the period			12		6,255,000		12		4,650,000
Granted during the period			13		1,050,000		8		625,000
Exercised during the period			13		(530,000)		-		-
Lapsed during the period			13		(2,750,000)		18		(200,000)
			10		4,025,000		12		5,075,000

The exercise price of options outstanding at the end of the period ranged between 8p and 13p (30 June 2015: 8p and 18p) and their weighted average contractual life was 1.9 years (30 June 2015: 1.8 years). None of the options have vesting conditions.

              The weighted average share price (at the date of exercise) of options that lapsed during the period was 13p (30 June 2015: 18p).

The share based payment charge for the period was £73,300 (30 June 2015: £51,524).

Warrants

			Six months ended 30 June 2016				Six months ended 30 June 2015
			Weighted				Weighted
			average				average
			exercise				exercise
			price (pence)		Number		price (pence)		Number
Outstanding at the beginning
of the period			14		5,497,867		13		3,340,000
Granted during the period			-		-		15		1,387,867
			14		5,497,867		14		4,727,867

The exercise price of warrants outstanding at the end of the period ranged between 11p and 30p (30 June 2015: 11p and 30p) and their weighted average contractual life was 2.6 years (30 June 2015: 3.6 years).

The weighted average share price (at the date of exercise) of warrants that lapsed during the period was nil (30 June 2015: nil).

Other notes:

Eden is an early stage revenue company with intellectual property and expertise in encapsulation, terpenes and environmentally friendly technologies to provide naturally occurring solutions to the global agrochemicals industry, the animal health industry, and consumer products.

Eden's encapsulation technology harnesses the biocidal efficacy of naturally occurring chemicals produced by plants (terpenes) and can also be used with both natural and synthetic hydrophobic compounds. The technology uses yeast cells that are a by-product of numerous commercial production processes to deliver a slow release of natural compounds for agricultural and non-agricultural uses. Terpenes are already widely used in the food flavouring, cosmetic and pharmaceutical industries.

Historically, terpenes have had limited commercial use in the agrochemical sector due to their volatility, phytotoxicity and poor solubility. Eden's platform encapsulation technology provides a unique, environmentally friendly solution to these problems and enables terpenes to be used as effective, low-risk agrochemicals.

With leading consultants in their respective fields, the Company is developing these technologies through innovative research and a series of commercial production, marketing and distribution partnerships.

The Company has a number of patents and a pipeline of products at differing stages of development targeting specific areas of the global agrochemicals industry. To date, the Company has invested in the region of £12m in developing and protecting its intellectual property and seeking regulatory approval for products that rely upon the Company's technologies. Revenues earned by the Company have been modest whilst the Company has concentrated on securing patent protection for its intellectual property, gaining regulatory approvals, identifying suitable industrial partners, and entering into licence agreements. 

In May 2013, the three actives that comprise Eden's first commercial product, 3AEY, were approved as new ingredients for use in plant protection products.  This represents a major milestone in the commercialisation of Eden's technology and is a significant accomplishment for any company. To illustrate this point, one should note that in all of 2013, Eden's approvals represented three of only ten new active ingredients approved by the EC.

3AEY has been authorised for sale in Kenya, Malta, Greece, Bulgaria, Spain and Italy.

Eden was admitted to trading on AIM on 11 May 2012 and trades under the symbol EDEN.

For more information about Eden, please visit: www.edenresearch.com 

 

END

 

 

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